Global solar panel shortage

The cost of installing solar energy is finally within reach for many Americans, but people who have waited for this seemingly opportune time are being told to move to the back of the line. U.S. manufacturers of solar panels are sending products to the lucrative German and Japanese markets, casting a shadow over the domestic solar industry.

After years of escalating electricity prices, power failures and concerns about energy independence, states including California, New Jersey and Maryland recently passed laws to make it more affordable for businesses and homeowners to go solar. The states will pay up to 70 percent of the cost of installing photovoltaic solar panels, prompting many people who were interested in solar for environmental reasons to make the investment.

Sky Sims, president of solar panel installation company Ecological Systems of Neptune, New Jersey, said the 70 percent rebate on solar panels offered in his state will help to double his business this year. Sims said the industry average turnaround for ordering and receiving photovoltaic solar panels "used to be about one month, but now it's two to three months or more."

Sims said solar panel installation companies without multiple sources have to turn away business or pay a premium for imported solar panels. He said some customers have cancelled orders because they are tired of waiting.

Solar panels are in short supply because many manufacturers are sending their available product to Germany and Japan, where they can be sold for more, according to solar energy consultant Paul Maycock of PV Energy Systems. He said that while demand in the United States increased last year, production actually went down slightly as large photovoltaic manufacturers including BP and Sharp moved production facilities to Europe.

Solar panel installations in Germany, which is about the size of Oregon, will produce about 220 megawatts in 2004, or nearly twice the amount predicted for the United States, according to Maycock. Germany gives customers a credit of 0.5 euro per kilowatt-hour for using solar energy. He said Japan and Spain also have aggressive strategies for spreading solar energy, which are adding to the shortage in the United States. "If companies can get a higher price in Europe, then that's where they'll sell it," Maycock said.

"Is it a crisis? No," said Glenn Harris, spokesman for Energy Outfitters, a distributor of solar panels. "Is it at the wrong time for the U.S. market to grow? Definitely." Harris said the increased demand has caused the price of solar panels to rise for the first time, which isn't good news for an industry that is trying to compete with lower-priced fossil-fuel-based energy.

"It's a world market condition that's having an effect on local markets," Harris said. The U.S. market could have doubled this year if there were enough solar panels available, but instead the market will grow by 50 to 70 percent, according to Harris. He said some PV installation companies are turning away customers, or are using cheaper materials because that's all that is available.

Harris said the shortage would likely continue for the rest of the year as manufacturers try to ramp up production. He is worried that customers who might have been hesitating to buy solar panels could be turned off by the long wait. "It's a bad trend," Harris said.

"Pricing policies (for the world solar market) are set in Frankfurt and Tokyo," said Ron Pernick, founder of clean-energy consulting company Clean Edge. Pernick said it's great that solar panels are being installed on rooftops all over Germany, but "Germany may have set their subsidy too high."

Pernick said that because the solar industry is growing at 30 percent per year, manufacturers would increase production to meet demand in 2005. But for now, Pernick said customers may have better luck with larger companies than "mom and pop" installers who may not be able to get solar panels quickly.

Editorial Notes: At time of posting (22 Aug 04), industry sources (in Australia) report that this shortage persists and is causing significant delays in installations, cancelled orders, and hardship for those enterprises selling solar energy systems to consumers. -LJ Original title: 'Europe Eclipses U.S. Solar Shift'

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